Govt sops not to come so easy for cellular operators

NEW DELHI, Aug 6: Cellular operators may not have an easy time getting the two-year moratorium from the Government with the Department of...

NEW DELHI, Aug 6: Cellular operators may not have an easy time getting the two-year moratorium from the Government with the Department of Telecommunications (DoT) likely to insist that cellular operators pay their outstanding dues within one year of the moratorium ending. This view was expressed by the legal wing of DoT at an internal meeting before DoT finalises the note seeking Cabinet clearance to refer the matter to the Telecom Regulatory Authority of India (TRAI).

According to the legal opinion on the matter, sources say, if the demands of the cellular operators of being allowed to repay the licence fees of the two years over the remaining part of the licence period is allowed it would be tantamount to allowing them a facility of repayment by installments over 10 years which would be much more than the two-year moratorium that they have been demanding.

From the Government’s point of view, the annual Rs 2,000 crore revenue that is expected to come in the form of licence fees, should accrue to theGovernment when the moratorium period ends after two years — giving the Government Rs 4,000 crore at that stage. If this is not repaid in a lumpsum but rather distributed over the remaining eight to 10 years of the licence fees, the Government cannot budget for this revenue even after the moratorium period is over.

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The draft Cabinet note, the sources say, will have to take into account this factor before it is circulated to the other ministries like Finance, Industry, Law and the Planning Commission which will have to be given a true picture before the Cabinet can take a decision on the matter.

Cellular operators have been demanding these concessions for a long time including a two-year moratorium on the payment of licence fees as well as an extension of the licence period from the present 10-year period (with a provision for extension by five years) to 15 years (with a five-year extension later). Cellular operators, apart from the two-year moratorium which would involve denying the Government Rs 4,000crore as non-tax budget revenues over the next two years, have chalked up pending dues of Rs 1,300 crore already.

Industry sources when contacted said repayment within one year after might be difficult for companies which are bleeding from the financial pressure of a depressed offtake of cell phones and the burden of high licence fees. They say that if all these modalities have to be decided within DoT then there would be very little scope for seeking recommendations from the TRAI.